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News: A forum for passengers ... with input from rail professionals welcomed too

Britain^s record-breaking ^38bn investment in the railways is to come under tighter government scrutiny when the body responsible for implementing the changes is in effect nationalised next month.

Following a European Union edict, Network Rail, the state-backed organisation that owns and operates Britain^s railway infrastructure, is to be reclassified as a public body on September 1, with its ^34.2bn gross debt shifted from the private sector on to the government^s balance sheet. As part of the move it will no longer borrow on the public markets but will receive loans from the government.

Network Rail, headed by Mark Carne, a former senior executive at Royal Dutch Shell, said it was a ^statistical change^ that would have little effect on passengers. But it added that it would ^mean greater accountability and transparency to parliament, the tax and fare payer, who rightly deserve to better understand the value of their significant investment in Britain^s booming railway^.

The changes have been welcomed for bringing an end to 13 years in which the body^s ambiguous status has raised major questions about its accountability to taxpayers, who will provide about 60 per cent of its ^38bn income over the next five years.

Network Rail, which controls railway tracks, signals, overhead wires, tunnels, bridges, level crossings and 2,500 stations, has been a private company since it was set up in 2002 ^ as ministers have always liked to point out at moments of acute controversy.

That private company has no shareholders and is held to account by 43 members who attend annual meetings and approve the appointment of directors, largely drawn from the private sector. At the same time its finances are guaranteed unconditionally by the UK government.

With the company now reclassified as a public body, the government is keen to introduce a more stringent governance framework. It is concerned that politicians will be forced to carry the blame for any future problems with punctuality, rail services, or finances.

The Office for Rail Regulation, which is funded by a levy on train operators, is already engaged in talks with the National Audit Office and the Public Accounts Committee as to how it can provide more detailed information.

^Network Rail will have a different relationship with government,^ an ORR spokesperson said. ^Essentially they will become a part of the public sector and there are various rules they will need to comply with. They will have to report on their financial performance to parliament in a way they haven^t had to before.^

Network Rail^s executive pay and bonuses, long a bone of contention with unions, are also likely to be restructured so that incentives are more closely matched to performance, the ORR said. It emerged earlier this year that the company had paid out bonuses of ^1m at the same time as being fined ^53m for failing to meet train punctuality targets.

The reforms ^ spurred by the Treasury ^ have created Whitehall friction as officials at the Department for Transport try to work out the new governance arrangements. ^The DFT is much less keen on this than the Treasury,^ said one Whitehall official.

The DFT confirmed it was still working to ^determine the best approach to the company^s corporate governance and financial management^ but a framework agreement is expected to be published next month.

Experts warn there could be a danger of the body becoming a political football, despite claims it will maintain operational independence.

Stephen Joseph, head of the Campaign for Better Transport, said: ^Ministers will have a more direct relationship with Network Rail. What will happen is that MPs will go to ministers, saying ^if you want my vote on this or that I need better rail services in my constituency.^

Another senior rail figure added: ^Ministers will be more responsible. In the old days they took credit for the positive but when things were negative they hid behind the fact that it was a private company. It will be much harder for politicians to castigate it.^

Of Network Rail^s ^34.2bn debt, ^33.2bn is in listed bonds, meaning it has been paying an increasing amount of its income on servicing its debts. In the financial year 2013/14, it incurred ^1.4bn in financing costs, representing 22 per cent of total revenues of ^6.3bn.

Network Rail^s revenue comprises the grant ^ 62 per cent; track access charges from train operators ^ 34 per cent; and property and station retail income ^ 4 per cent.

The ^38bn over five years consists of a ^6bn-a-year grant from government, which includes ^2.5bn of track access charges paid by train operators. The remaining ^8bn comes from a mixture of property, retail income and loans.

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William Huskisson MP was the first person to be killed by a train while crossing the tracks, in 1830. Many more have died in the same way since then. Don't take a chance: stop, look, listen.

"Level crossings are safe, unless they are used in an unsafe manner." Discuss.

In December 2013, the Office for National Statistics (ONS) announced that, due to a change in European reporting rules, Network Rail Limited with all of its subsidiaries would be reclassified as a central government body. That decision takes effect today (1 September 2014), and Network Rail is now a public sector arm^s-length body of the Department for Transport.

The government has approached its response to the ONS decision in partnership with Network Rail, with an emphasis firmly on the preservation of Network Rail^s ability to continue to manage its business with appropriate commercial freedom, within effective regulatory and control frameworks appropriate for a company in the public sector.

Today, I am publishing a framework agreement between the Department for Transport and Network Rail which sets out how both bodies will interact in terms of corporate governance and financial management. By working closely with Network Rail, my department has delivered a framework that provides appropriate accountability to Parliament and the taxpayer while preserving Network Rail^s operational independence. This both keeps clear Network Rail^s accountability for its performance and maintains the regulatory process managed by ORR to give industry the confidence to plan for the long term.

Given that Network Rail is now part of the public sector and government^s accounts, I will fulfil an enhanced role in overseeing the company. The framework agreement sets out how I and my officials will take on new responsibilities:

I will appoint future Chairs of Network Rail and approve or be consulted on other key governance changesI will approve Network Rail^s remuneration policy and pay for executive directorsThese changes have been reflected in ^Network Rail^s articles of association^ and agreed by Network Rail Members on 29 August 2014.

My department will also ensure that Network Rail complies with Parliamentary reporting requirements, Managing public money and other relevant public sector-wide rules.

I am also publishing a memorandum of understanding between the Department for Transport and the Scottish ministers, setting out how they will be involved in future decisions on Network Rail^s governance and financial management, and a loan facility agreement entered into between me and Network Rail Infrastructure Limited.

Congratulations, dear reader! As of this morning, you have racked up an extra ^539 in debt. No, you haven^t just bought a new wardrobe. You haven^t made a deposit on a winter break. And it^s not because of that heavy eBay session where you overbid for a signed Bulgarian copy of Wet Wet Wet^s first LP.

Nor are you alone. I^m another 539 quid in the red too ^ as are each of the other 63 million Britons. Put all those sums together and the entire country has just lost ^34bn. How did we manage that? The short answer is that some statisticians made it so. The Office for National Statistics has decided that, under new accounting rules, Network Rail can no longer be called a private company. It was always borrowing on the state^s behalf, and if anything went wrong with Network Rail, it was always going to be taxpayers who would be on the hook. So as of this week it goes on the public balance sheet, its ^34bn of debt now indelibly inked next to our names.

etc

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Coffee Shop Admin, Member of Melksham Rail User Group, on the board of TravelWatch SouthWest and some more things besides

As a central government body it will now, I presume, be subject to the Freedom of Information Act.

A number of news reports recently have said it will remain exempt.

Paul

The 'framework-agreement.pdf' between the DfT and Network Rail begs to differ.

Quote

1.15 The Government and Network Rail have agreed that Network Rail will be subject to the Freedom of Information Act 2000 in relation to its public functions. This requires secondary legislation, which the Government will be bringing forward at the next opportunity.

The 'framework-agreement.pdf' between the DfT and Network Rail begs to differ.

Quote

1.15 The Government and Network Rail have agreed that Network Rail will be subject to the Freedom of Information Act 2000 in relation to its public functions. This requires secondary legislation, which the Government will be bringing forward at the next opportunity.

One can only assume then that last weeks media stories were groundless, eg in the Guardian's article they seemed to be quoting it as a certainty from the TSSA secretary, who was insisting it was not to be subject to FOI. Perhaps he was just getting his retaliation in first...

As a rider to this thread, here's a thing that may sound familiar. National statistics office reclassifies national railway infrastructure operator as part of the state sector, having been trying to get the government to do so for years.

In this case, however, it's happened in France. It is perhaps not surprising that RFF was labelled as independent, though not commercial, when created (1997), for the same reasons as Network Rail was - both were set up for similar reasons. (The surprise was that the French ever did it this way, while the Germans didn't.) But looking at the details, most of them are different.

The statisticians (Insée) do not seem to think the reform of 2014 made much difference, though it looked a lot like merging RFF back into SNCF then minimally splitting them along a different line. What they have done is to look again at the accounts of RFF and SNCF Réseau, and have concluded that they do not earn enough to eventually pay off their debts. Thus they are dependent on some sugar daddy to do that, and only the state is going to put their hand on their (necessarily big, very big) wallet for that one.

This sheds a different light on this year's reform, which saw the unions arguing for all this debt to be taken on by the state, and the government reluctantly agreeing to adopt most of it in return for what they wanted - reducing the unions future influence. So, that nice M Macron and his buddies were sneakily making a virtue out a necessity. This also explains why they were in such a hurry; so as to get the whole process done this summer before the news came out.

Now, does anyone know which sector DB Netz officially belongs to?

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